Wall Street sold all things artificial intelligence (AI) over the last week. The risk-off pivot hit everything from soaring AI darlings AppLovin and Palantir to nuclear energy giant Constellation Energy and Bitcoin.
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A confluence of headlines and nervous energy heading into Nvidia’s earnings release sparked a wave of profit-taking on soaring stocks.
Wall Street was locking in big winners sooner or later considering that AI stocks such as AppLovin and Palantir soared more than 200% between November 4 and February 18.
The Nasdaq’s afternoon tumble Thursday pushed it to its 200-day moving average for the first time since the summer. The tech-heavy index is also at its most oversold RSI levels since August, and CNN’s Fear & Greed Index (a contrarian stock market indicator) sank from Neutral (47) a week ago to Extreme Fear (22).
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No one knows what’s right around the corner. But traders and long-term investors might start buying at the 200-day especially since Nvidia’s report and guidance highlighted bullish tech earnings growth in 2025 and beyond.
It might be time to start getting greedy while others are fearful.
Today’s Full Court Finance at Zacks dives into two artificial intelligence stocks —Vertiv and ServiceNow—to buy at discounts amid the AI and momentum stock selloff.
Buy This AI Stock Down Over 20% from Its Highs?
ServiceNow NOWautomates workflows across IT, HR, and beyond, serving customers in every area of the economy. The digital workflow services and solutions company’s expansion into AI boosted its appeal to its enterprise customers that must keep up with technological and AI innovation.
ServiceNow boasts that it is the AI platform for business transformation. NOW’s expansion over the last decade highlights its ability to attract and keep customers.
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ServiceNow’s critical offerings and successful subscription model (97% of revenue) helped it grow its revenue by 20% or more over the last decade, including 22% growth in 2024.
ServiceNow’s earnings estimates dipped slightly after its Q4 release on January 29, contributing to NOW’s drop. Still, the tech firm is projected to grow its revenue by 19% in 2025 and 2026 to boost its earnings by 17% and 20%, respectively.
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NOW shares climbed roughly 1,150% in the last 10 years to nearly quadruple the Zacks Tech Sector.
ServiceNow has cooled off in the last three years and its 22% drop from its January highs has it neck and neck with tech in the past 12 months. NOW is finding buyers at its 200-day moving average, with its 50-week the next line of support.
ServiceNow trades near its most oversold RSI levels of the last year, and 31 of the 39 brokerage recommendations Zacks has are “Strong Buys.” ServiceNow is also buying back its stock.
The growth-focused AI stock might also be due for a stock split at some point since it trades for $920 a share.
This Tech Stock is a Must-Buy For Long-Term AI Growth Down 40% from Its Highs
Vertiv Holdings Co VRTis a behind-the-scenes technology powerhouse poised to grow alongside the massive expansion of AI data centers and other compute-heavy innovations such as cryptocurrencies. Vertiv’s hardware, software, analytics, and ongoing services portfolio is focused on power, cooling, and IT infrastructure.
In short, Vertiv helps the computing power needed to drive the modern economy and the AI boom run as smoothly as possible around the clock. Vertiv has partnered with the king of AI chips Nvidia NVDA to help solve critical challenges such as cooling, and it stands to benefit no matter which AI hyperscalers come out on top.
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VRT topped our Q4 EPS estimate on February 12. Vertiv grew its adjusted earnings per share by roughly 60% in FY24, following 230% expansion in 2023.
Despite the DeepSeek AI spending fears, Vertiv reaffirmed the five-year financial framework it offered Wall Street in November, driven by the AI boom.
Vertiv is projected to grow its revenue by 15% in 2025 and 2026 after 17% average sales growth in the trailing three years. The picks and shovels tech stock is expected to boost its adjusted earnings by 26% and 24%, respectively.
VRT stock has ripped 490% higher in the past two years to top Nvidia’s 415%, with it up 690% in the last five years vs. Tech’s 135%. This performance includes Vertiv’s roughly 41% tumble from its peaks. At $92 a share, VRT trades around 43% below its average Zacks price target.
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Vertiv is attempting to find buyers near its 50-week moving average while at its most oversold level over the past several years. Despite its long-term outperformance, Vertiv trades nearly in line with the Zacks Tech Sector at 26.5X forward 12-month earnings. VRT’s impressive long-term earnings growth outlook helps the stock trade at a 44% discount to Tech, with a 0.9 PEG ratio.
Now might be time for long-term investors to buy Vertiv down 40% from its highs since 14 of the 17 brokerage recommendations Zacks has for Vertiv remain “Strong Buys.”
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